Avoiding probate is a noble goal of estate planning, but some gambits are much more trouble than they are worth. Many Americans wonder about the best way to pass down property to their heirs. Often, property is the largest asset that an American owns, and taking care of passing it down properly is a big concern.
In order to help airs avoid probate, some Americans are electing to put their adult child’s name on the deed to their home. However, according to In Charge, this is often a major mistake.
How does this work?
If you put another adult on the deed to your home, you and that other adult now own the property in joint tenancy. With joint tenancy, if one owner of the property dies before another, the property automatically passes to the surviving owner. In this way, the property avoids probate.
Why is this a bad idea?
Once you put another adult on the deed to your home, that person owns the home in the exact same capacity that you do. It makes no difference if you are the parent or if you owned the property for several more years. This means that you will not be able to sell the property or refinance without the permission of the other owner. This often causes conflict between parents and children.
Additionally, this puts your home at risk if your child is not financially solvent. For instance, if the IRS goes after your child for back taxes, the IRS may put a lien on your home if your child’s name is on it. Usually, it is a better idea to put the home in a trust if you want to avoid probate.